I haven't had time to read the PACER filings, but the Bloomberg/WSJ articles indicate the shareholders will have to ante up some money to keep their shares. And only if the latest offer wins the auction.
"If you are a company — particularly a Chinese company — that would like to be publicly traded in the U.S., but that would prefer to avoid the scrutiny that comes with an initial public offering, doing a “reverse merger” — acquiring the empty shell of a near-defunct but public U.S. company — is often an easy way to do it."
> People occasionally conflate these shell-company reverse mergers with the current boom in special purpose acquisition companies, but they are really very different. A SPAC goes public and raises money specifically for the purpose of taking a private company public; it sells shares to the public and then has a public vote with a lot of disclosure to complete its merger. A reverse merger generally involves a public shell of a more or less defunct operating company (or at least one that pretended to have operations); the shell will be fairly closely held by a few insiders, and there will be no real money inside it. It is not a high-profile way to go public and raise money, the way a SPAC is; it’s a low-profile way to sneak into the public markets.
It's too fun to think about the original why? and what?!
It's probably because I'm re-watching the Sopranos but sounds like a more fun answer than pump and dump would be a front company. Dirty cash -> sandwich -> corp money -> consulting corp money. In that fantasy would be weird to not report more revenue. Plus added opportunity to flip the corp into a merger like the article says which sounds more likely.
Though the SEC probably won't like a takeover with a RICO indictee as owner ;)
I get that fraudsters are defrauding suckers but how will that lead to a market crash, aren't normal stockholders holding stocks of normal companies? I could see a bubble deflating but wouldn't your typical stock go back to what it was a few months ago vs. going to be half its value?
A simple way to think about this: everyone in society has a portfolio of assets, they allocate to that portfolio based on risk/return/liquidity/etc, and the most important ratio here is cash to assets.
At this stage in the cycle, perceived risk is very low, expected returns are very high (some of the stuff you read on this is next-level crazy, ppl saying they are guaranteed a double digit real return from equities), and so no-one wants to hold cash...any cash. They hold very low levels of cash relative to total assets.
At some point, this will change. Cash % of assets is basically stationary (to some extent, the mean % has probably trended down this decade slightly though). Large-scale fraud will lead to a re-examination of the relative reward of assets, actual losses mean that your ratio of cash to assets drops, and people sell to either increase liquidity/panic/etc.
Bubbles sometimes deflate slowly, most often they do not because people aren't rational. If you buy into a stock expecting to sell it someone else at a greater price, what do you do if you wake up one morning and it is down 20%? You get out. There is no reason to hold it. You can't earn fundamental value at that price. This is happening in multiple stocks, margin calls, brokers start liquidating client portfolios en masse...you get the picture.
Ok, so I have to hope that the guys managing my 401K act more rationally, e.g. slower to jump on these stocks and slower to get out of mainstream assets. I guess that's not guaranteed but I would hope they know better than to invest in this deli.
No. If anything, they are going to be more irrational. The incentives for most advisers are horrible.
Ymmv, if you have a good adviser then great. But I used to work in this area, and even in my first real job (not my first job in the industry though) the level of ignorance was brutally obvious.
For example, my first employer was a single adviser firm that just got acquired for $5m...this guy didn't know how to use Excel, he didn't know how to build a financial forecast, he didn't understand that life expectancy at birth was different to expectancy at retirement, he didn't understand basic elements of finance (for example, why you can't make money buying a stock and selling after they pay a dividend), he didn't understand how to compute returns, and falsified those numbers in marketing when they showed bad performance...and this is a guy who has hundreds of clients, and $100m+ in assets. However bad you think it is, it is much much worse.
Most of the people on here will do better if they apply a little time, and understand that human reasoning is flawed (i.e. don't get swept in the hot new thing). That is all that is required.
Scary! I'm still 8-10 yrs from retirement but most of my funds are in target-retirement-date type funds with lower risk. This latest round of news stories and conversations like this motivate me to look at what actual stocks I own. I can totally relate to the irrational exuberance - I look at how well my investments have done through the pandemic and expect things to get "even better when the economy wakes up again" but that could be totally wrong.
Target date funds are least bad...if they are composed of ETFs. It isn't worth looking at individual stocks. If you want another layer of diversification: add a different asset class (for example, more bonds), or add more geographical exposure. This isn't advice of course, so be careful to understand how any change has impacted performance in the past (it isn't always a good guide but it is better than nothing).
Not in the US. Unbelievably, there aren't specific rules against falsifying returns if you are careful with how you present them (for example, the CFA, the main accreditation for fund managers, just has a "code of conduct"...ironically, the guy who is the director of conduct on the CFA board in my country used to steal from employees). This guy didn't actually know this, he just didn't understand how to construct returns, and made "adjustments" until the number was right. His only real area of knowledge was complex, high-fee insurance products, he knew nothing about actual investing (he used to work as a captive salesman at an insurance company).
Predicting the future is obviously imperfect, but there's no particular reason to rule out investors realizing one day that stocks in all the "normal" companies are actually worth only half of what they were selling for the day before. It has been a long time since there was a major downturn in the market, but it is almost guaranteed that there will be another sooner or later.
There haven't been very many good places to invest capital during the pandemic, so most of the money floating around has gone into the stock market. As the economy opens up, there will be more and better opportunities to invest huge sums of capital outside of the market. That will naturally lead to devaluation in the market, and, potentially, a rather large "correction."
In March 2020 they were down 30% from the peak a month before. There was a virus. You may have heard about it? It was in the news. :) People didn't know what was going to happen.
Previous peak to present might be a less misleading factoid. And that is +20%. Still a big number but less impressive. It may be that confidence in public markets was bolstered by the resilience of the big companies' profits in the face of the virus.
You picked another trough as your baseline. Only up ~40% since Oct 2018. Still two very big years -- double the long run historical average -- but also a good deal less sensational than the numbers you're pulling out.
For what it's worth, a look at the annualized returns chart for the S&P500 might be interesting. https://www.macrotrends.net/2526/sp-500-historical-annual-re... Those green bars on the right don't look tremendously out of place compared to past years. What's really different from previous decades is not the rate of growth but the lack of financial market downturns. Hard to say if that means we're ramping up to "the big one" or if we have fundamentally figured out how to better run the economy so that we have fewer downturns.
Right, the question is whether the record low interest rates will actually need to be slashed at all. We are seeing some inflation in some sectors -- lumber, computer hardware, probably other things I'm not mentioning. But it's not clear whether this inflation is from supply shocks, displaced consumption due to COVID, or monetary issues. I mean, it's all three, but it's not clear how much of the responsibility lies with each cause.
I keep seeing it described as "a New Jersey deli". Here in this article "rural New Jersey". It's a 15 minute drive from South Philadelphia and across the Delaware from the Philadelphia airport. I don't think it's as charming as people are imagining it. Less Garden State and more Superfund Site.
I'd associate pastrami more with NY Jewish delis than NJ delis. Actually, being from NJ, I didn't even know "NJ delis" were a thing, besides for Wawa. I'm going to just include delis that are in hoboken/newark/the rest of the NJ-side of the NY metro region as NY delis.
The closet thing I think we have are hoagie shops, but those aren't particularly special apart from the fact that we call them hoagies and not subs or even just sandwiches.
Maybe just me, but a place with the word "deli" in its name, without at least one of a Rueben/Corned Beef/Pastrami is weird, anywhere in the north east.
I can't speak for NE USA at all (I'm from SW UK, ha) but for me that's not at all a requirement, it'd almost be exceptional. I don't even know what Rueben is.
I gather it's quite different in the US though. (A 'deli' there being probably culturay Jewish? Whereas to me it's just a place that sells.. I don't know, cheese, olives, oily antipasti, anything it wants really just with an emphasis on fresh and nice and prepared or preserved in some way. Greek or Italian if anything, rather than Jewish.) Honestly the Street View photos someone posted look like a sandwich bar in a war zone!
One has to distinguish between a grocery-store deli and "a deli". The latter is strictly a type of restaurant (or walk-up food counter, if you want to distinguish that from a restaurant). Some of them might sell meats and cheeses and such but you wouldn't expect a random deli to do so.
As for a delicatessen shop, there are surely some not actually attached to grocery stores, but, for example, I'm unable to convince google maps to show me any in a region of 2MM+ people (in the [US] South) no matter which term I use containing "deli". If I needed to find one I'd probably search for "butcher", "grocer", or "market", and Google Maps confirms this is a good start for finding the right kind of store.
In the UK some supermarkets (as in, some branches of some chains) do have what you might call 'a deli counter', but that isn't what I mean.
Stand-alone delicatessens here tend to be only barely 'a restaurant' (even then more 'only barely a café', really) with one or two tables for two. They sell cheeses, biscuits, olives, other antipasti, pickles, perhaps some select nice sandwiches or bruschetta, etc. Some sell probably higher margin items like boxed teas, coffees, and biscuits, related merchandise like cafetières, cotton bags, and tea strainers.
They are decidedly not 'diner' type venues, the place linked on Google Maps would be called a café in the UK.
(To be clear I'm not saying anything's right or wrong, just that it's interesting, terminology, and something that's very loosely the same but also really different.)
Yes, it's a regional thing there. You can confirm with google, though. Search for places with the name "deli" in it in the northeast US. You'll see most of them serve pastrami and corned beef sandwiches.
This is not my experience at all, and I've eaten from at least one deli in every state between PA and ME except RI, and grew up surrounded by Italian delis. The two Jewish delis in the area were called "kosher delis" and were attractions specifically because they were not the typical kinda-Italian-ish suburban deli, or the white-bread-American rural deli.
Go back in time on Street View and you'll see it was a Conrail family assistance center (?)... so maybe they used that to talk to the trains. Look at the elements on that tower and looks an awful lot like stuff I've seen out the window of a train. Little rectangular bow-tie looking things, mounted so their long axis is up-down.
And still regulators will not step in. And still the Fed will pump money both announced and unannounced. The financial world is a complete joke. Makes complete sense that Elon Musk is pumping dogecoins.
Make sure you read down to that awesome anecdote about "mosaic theory" how large investors profit off of private meetings with executives even though sharing "material information" is illegal.
> On the other hand, it is clear that the Aberdeen analyst got useful information out of this meeting. The analyst paid close attention to the discussion of the chairman’s spa trip and charity polo match, and got a strong and accurate sell signal from that discussion. Surely the most useful information in the meeting came from the guy’s tan. If you describe an executive as “unfeasibly tanned” in a research note, you have definitely decided to sell. Here, that was the right call.
I agree that Levine's writing is way funnier than "financial newsletter" would lead you to believe, but I actually unsubscribed this week after trying it for a couple of months. Problem was, I'd just read the whole week's newsletters every Saturday morning, and I always came away kind of depressed at how how much energy people devote to venality.
Well I'm delighted to see that if their takings are anything to go by, our speciality grocery shop that we opened exactly six months ago must be worth $60-70m. Time to sell up and retire stinking rich!
Are you writing about this specialty grocery shop anywhere? I'd really like to read an account of the process of opening and operating something like that.
Not at the moment, too busy doing it :) But it's oft crossed my mind I should be writing about it, it's been an interesting ride. We're trying to bootstrap it in a lean way, with pretty tiny amounts of capital.
If I ever get round to a blog I'll post it on here.
If I mint 50,000,000,000 OhSighCoins, give away all but one for free("Airdrop"), and trade one for $1, that is not really a good indication that there are $50B in OhSighCoins circulating.
Depends on how many people were involved in the trading. To pick a contrived example, suppose the only two transactions on the ledger were me buying 1e-9 dogecoins for $1, then you and me swapping forty dogecoins. That situation would match the circumstances you described. Kinda what this article is about actually.
on what basis should anyone believe such a ludicrous number represents legitimate skin-in-game volume and not a handful of fee-free bots trading SQL queries back and forth without ever touching a fiat ramp?
none of these self-reported volume numbers should be considered remotely realistic. exchanges have every incentive to cook their metrics in favor of "volume" to draw in fresh meat.
What Matt often misses that regulations are not there to prevent stupid investments, they are there to prevent fraud and insider trading. If you want to lose your money by buying $100m deli there should be nothing in the world to stop you losing money that way.
>Small investors who get sucked into these situations are likely to be harmed eventually, yet the regulators – who are supposed to be protecting investors – appear to be neither present nor curious.
then you are incorrectly attributing that to Matt. It was a quote from Einhorn’s Greenlight Capital.
You make an interesting argument about what should be, but are wrong in describing what currently is. The people in charge of those regulations consider this their purpose
> Our focus on Main Street investors reflects the fact that American households ...
> The federal securities laws we oversee are based on a simple and straightforward concept: everyone should be treated fairly and have access to certain facts about investments and those who sell them.
For example, you're required to pass varying levels of quizzes on financial knowledge to be allowed to trade different sorts of things. The goal of this is to protect naive investors from being taken advantage of.
This is a myopic take on both Levine's writing and the external impact that stupidity can have on other market participants, positioned in entirely different assets.
Everyone will soon come to hate this story as ten businesses in their hometown try to recreate it, and it will eventually lead to evening news stories about how some lawyer convinced a local favorite to go public and they're now facing foreclosure.
The intent was not to meme I think, it costed the deli owners quite a bit,in the low six figures to go public?
They probably wanted to flip it for a reverse merger. Don't think that many businesses have the connections or need to create a flip like this for some Chinese company.
I only read random things of his that get posted here, or sometimes when people link to older articles of his that are particularly interesting, and I've been doing it that way since before 2013, IIRC. It's not that I read a lot of his stuff, it's that he has a few very well known and widespread articles which I have read and he has a very distinctive style. Specifically, it was when I got to the Hertz section and he said "That said, you should never listen to me and I know nothing." That's a hallmark of all the Matt Levine articles I can remember reading.
I like some of this stuff, but he's part of the system and you can tell from his writing. The system that gets off on having information disparity between the powers and the people.
Very little value added at all but much extracted.
Bloomberg terminal subscriptions with $20k+/year licenses as one small example. The equivalent of an Oracle to many on here and the licensing most despise but for some reason nobody questions this guy? Or Bloomberg/CNBC/similiar in general? Or anyone peddling any financial stuff? Would we just trust a big co enterprise salesperson that's been around the block? No we wouldn't.
Anyway, he said of Archegos before:
"But one thing I want to say about the banks is that if you were one of Hwang’s prime brokers and you had perfect information — about how big he was and how concentrated, about how many banks were financing him, about his effect on stock prices, about Viacom’s stock offering, etc. — you might still rationally do this trade, if you were confident you could get out first."
You'd have to be part of the system to make a statement like that.
Banks take deposits and list them as assets. And then get risky with that money they have relatively low cash reserves for. And when they screw up, it costs them less than what they gained. It's ridiculous.
The financial engineers' version of rational is reckless.
On the bank's balance sheet, a deposit is a liability. In fact, it's a short-term liability, since most deposits can be withdrawn on short notice. A bank's central business is to borrow short (from depositors) and lend long (to individuals and businesses).
It's also an asset which earns them interest. Or in the case of the article and the Credit Suisse/Archegos situation, an asset they leverage to make really dumb moves with (and possibly fraud) to screw over pension funds and others in the process of their greed.
> most deposits can be withdrawn on short notice.
Except for the fact that person A deposits $X in the bank and person B has $X withdrawn, nothing physical happens. It's just an offset on the books and enables them to keep very low cash reserves.
"As of March 2020, the minimum reserve requirement for all deposit institutions was abolished, or more technically, fixed to zero percent of eligible deposits. The Board previously mandated a zero reserve requirement for banks with eligible deposits up to $16 million, 3% for banks up to $122.3 million, and 10% thereafter. The removal of reserve requirements followed the Federal Reserve's shift to an "ample-reserves" system, in which the Federal Reserve Banks pay member banks interest on reserves that they keep in excess of the required amount." [1]
I'm not sure how you conclude that. And you're inserting "ethics" into a bank's business decision?
He writes like that because he's part of the system. It's so entrenched it's all self preservation and tons of money influencing the media to say what they want them to say. But it's hard to parse because the experts that are feeding seemingly sensible info are former Goldman Sachs or similar.
Jim Cramer bragged about how he manipulated stock prices at a hedge fund and if he was short you can't "foment", on your own, an impression that a stock is down but you do it anyway because "the SEC doesn't understand it". You trick the "moron longs" and "spread a rumor on Apple because the writers want that story and Apple isn't going to comment on it". "this is what's really going on in the market that you really don't see". "what's important when you're in that hedge fund is to not do anything remotely truthful because the truth is so against your view that it's important to create a new truth". It's absurd. [1] And this guy is still on a major network with major influence.
If you are looking at that Archegos situation objectively, you would say clearly - that's fucked up for them to do with other people's money. Not Levine.
Yet when "normal" people risk their own money on something he disagrees with, he's writing a big diatribe about how ridiculous it is. When banks play with their money, nothing to see here people. They might have been doing a rational move.
Or in this article "yes credit suisse did two bad things" and "Still it is strange to characterize this as primarily securities fraud against the shareholders, to think that the problem here was lying."
Just characterize it as securities fraud secondarily I guess Matt?
I like his insight into the system but he does way too much early PR damage control and apologies for the embedded players and not enough objective commentary. But again, he writes for Bloomberg and is former Goldman Sachs.
Except for the fact that I commented on the author of the article. And also the source in Bloomberg and the information disparity they benefit from financially. And also I commented on the author's previous ridiculous statement about Archegos which is in the article as well...
Yes I know he worked there in the past. But you could be a former Facebook employee and still be an apologist for any privacy concerns raised against tech. As I've stated in some comments, he tends to downplay wrongdoings by the players that are currently in the system.
So essentially, I get together with my friends take a random business public. We agree on the number of shares, and then we keep trading the stock among each other, carefully moving up the price. "I'll pay $10", "ok, I'll pay $10.50", "I'm in at $11".
When this gets to a $100 million market cap by doing this, we land a story online about this crazy, useless business that's worth $100 million. It captures the imagination of hoards of new-found meme stock, one-tap-away, YOLO crowd and suddenly, it has volume.
Thanks to this new found volume, I can easily cash out my shares to all the suckers buying this at $13.
A lack of liquidity (a.k.a. shallow order book) will likely make itself apparent at some point. Just because you have 10 million shares and people bidding $10 for a marginal share, doesn't necessarily mean you would be able to find a willing buyer(s) for the whole company at $100M.
this is the standard playbook for every cryptocurrency ICO since around 2013 (which IIRC is before the term ICO was even around). I'm sure it's no different for NFTs, which function rather like a single-coin ICO.
the only twist is that with crypto its possible to run this shell game much faster and with far less transparency thanks to pseudononymous accounts and the overall infrastructural obscurity that early stage crypotocoins enjoy, coupled with the near immediate price signal propagation possible in a purely virtual marketplace.
coinmarketcap owes its entire existence to its incredibly effective utility as a synthetic demand amplifier for extremely shallow, closely held token markets.
edit: forgot to add that when promoters need their own FOMO plant in the financial/tech media, one that talks up the amazing crypto-futurist potential of their new coin, a common payola tactic was to send the target journo a wallet preloaded with a "few coins to play around with, just to see how it works." Then simply sit back and let them figure out for themselves how to turn a routine $500 story assignment into an easy, practically untraceable $5k cash out. wash, rinse, repeat with a new ICO next month.
I'm very curious about the recent Signal announcement that they are "choosing" Mobilecoin for the payments. Mobilecoin being directly tied to the creator of Signal.
Look at this ramp starting March 28th, prior to the announcement:
> Painting the tape is an illegal activity and prohibited by the SEC because it creates an artificial price.
So it sounds clearly illegal and fully under SEC jurisdiction in the deli stock case, but what about the crypto market cases? Can the SEC go after other/foreign market cases for people under US jurisdiction or SEC regulated entities participating in painting the tape in blockchain markets or international markets?
> "I'll pay $10", "ok, I'll pay $10.50", "I'm in at $11". When this gets to a $100 million market cap...
Where I can see a list of all the individual trades that got the company to a $100M valuation? I'd like to see how it actually got bid up.
To be very clear, I'm looking for every single trade (Mr. X sold 62 shares to Mr. Y for $10.50 on April 7, 2021 at 10:52 am) going back to the beginning of the company. With or without the actual identities of Mr. X and Mr. Y.
I expect that the answer is that no such list is publically available. But why not? I can understand a privacy argument about Mr. X and Y's names, but why aren't all the individual trades public information for a public company?
Because the "smart money" investors don't want to be discriminated against in the market and they are big enough market participants that they write the rules.
If we did put a name attached to every trade, it'd become clear when someone is breaking up a big order into many small ones to avoid 'disrupting the market price' -- that is, getting a good price for at least some of their sale. Or buy order, I suppose.
The trades themselves (time and sales) are available to paid subscribers of various data services, but not identities. Only insiders/significant holders are required to disclose their identity. A search for "historical tick data" will yield plenty of results.
Much like everything in finance there is a gatekeeper, and they seek to extract every dollar they can.
yes, along with an even more lucrative stream called "order flow" which is practically an order book crystal ball that allows HFT shops to front run retail traders (and one another)
some crypto exchanges also sell order flow but they don't really need to, as its far more profitable to front run their own users, whose entire account activity including sidelines and account balance transfers, is completely exposed to exchange insiders, who can trade against it. "oh look, whale user #4457 just transferred $100k of $COIN into their account. I wonder what they plan to do next?"
Except if we transact shares privately it doesn't show up in the market. If we offer to buy shares on the market we don't get to chose who we buy them from and we can't offer to overpay for a share, we randomly get shares from whoever offers them the cheapest. Clearly people manage to pump and dump but I suspect it's a little more complex/expensive/risky than two friends swapping shares...
>People were like “yes, $100 million deli, absolutely, I want to buy that.” Hometown went from a thinly traded pink-sheet deli that nobody had heard of, to a company that everyone had heard of exclusively because it was a poster child for market excess, and … people … bought … it?
What are the chances that bots parsing financial news happened to pull out the stock code and auto-bought stock which was then sold manually? How often does this happen? In which case there were no people to buy it
> What are the chances that bots parsing financial news happened to pull out the stock code and auto-bought stock which was then sold manually
My guess would be almost 0 in this case. I'm sure there are cases where bots have been fooled in the past and bought themselves into bad situations, but prior to this story breaking, this stock was only trading a couple hundred shares a day. Trying to algo trade a stock with almost no liquidity seems like a recipe for disaster so I would think many bots would ignore the stock on volume alone.
I really believe it's just people who want to be part of the story and are buying into the novelty.
He's a public school teacher, so he has gold-plated health benefits, and a guaranteed pension. He's set for life. Why not take outrageous bets? He has nothing to lose!
It's a stock whose financiers are in Hong Kong and Macau.
Think about the rise in this no-name company with respect to the following laws and you'll all have more clarity on what actually went down.
- HR2513
- Illicit Cash Act
- Equitable Act
"Chinese Communist Party currently controls more than US$30 Trillion of Western Financial Assets scattered around the globe outside of mainland China. This war chest continues to grow at roughly $40 Billion a month. "
"David Einhorn warned people not to invest in Hometown International, even though it had never occurred to them to invest in Hometown International, but once they were warned not to they absolutely did."
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[ 2.0 ms ] story [ 195 ms ] threadI haven't had time to read the PACER filings, but the Bloomberg/WSJ articles indicate the shareholders will have to ante up some money to keep their shares. And only if the latest offer wins the auction.
"If you are a company — particularly a Chinese company — that would like to be publicly traded in the U.S., but that would prefer to avoid the scrutiny that comes with an initial public offering, doing a “reverse merger” — acquiring the empty shell of a near-defunct but public U.S. company — is often an easy way to do it."
It's like posting about how some scamcoin is a scam and so people run out to buy the scamcoin.
Though it's probably more like "$15 on a meme stock is nothing".
> People occasionally conflate these shell-company reverse mergers with the current boom in special purpose acquisition companies, but they are really very different. A SPAC goes public and raises money specifically for the purpose of taking a private company public; it sells shares to the public and then has a public vote with a lot of disclosure to complete its merger. A reverse merger generally involves a public shell of a more or less defunct operating company (or at least one that pretended to have operations); the shell will be fairly closely held by a few insiders, and there will be no real money inside it. It is not a high-profile way to go public and raise money, the way a SPAC is; it’s a low-profile way to sneak into the public markets.
Wouldn’t surprise me if they have another run at it considering how many new retail investors there are today and the froth in the market
It's probably because I'm re-watching the Sopranos but sounds like a more fun answer than pump and dump would be a front company. Dirty cash -> sandwich -> corp money -> consulting corp money. In that fantasy would be weird to not report more revenue. Plus added opportunity to flip the corp into a merger like the article says which sounds more likely.
Though the SEC probably won't like a takeover with a RICO indictee as owner ;)
At this stage in the cycle, perceived risk is very low, expected returns are very high (some of the stuff you read on this is next-level crazy, ppl saying they are guaranteed a double digit real return from equities), and so no-one wants to hold cash...any cash. They hold very low levels of cash relative to total assets.
At some point, this will change. Cash % of assets is basically stationary (to some extent, the mean % has probably trended down this decade slightly though). Large-scale fraud will lead to a re-examination of the relative reward of assets, actual losses mean that your ratio of cash to assets drops, and people sell to either increase liquidity/panic/etc.
Bubbles sometimes deflate slowly, most often they do not because people aren't rational. If you buy into a stock expecting to sell it someone else at a greater price, what do you do if you wake up one morning and it is down 20%? You get out. There is no reason to hold it. You can't earn fundamental value at that price. This is happening in multiple stocks, margin calls, brokers start liquidating client portfolios en masse...you get the picture.
Ymmv, if you have a good adviser then great. But I used to work in this area, and even in my first real job (not my first job in the industry though) the level of ignorance was brutally obvious.
For example, my first employer was a single adviser firm that just got acquired for $5m...this guy didn't know how to use Excel, he didn't know how to build a financial forecast, he didn't understand that life expectancy at birth was different to expectancy at retirement, he didn't understand basic elements of finance (for example, why you can't make money buying a stock and selling after they pay a dividend), he didn't understand how to compute returns, and falsified those numbers in marketing when they showed bad performance...and this is a guy who has hundreds of clients, and $100m+ in assets. However bad you think it is, it is much much worse.
Most of the people on here will do better if they apply a little time, and understand that human reasoning is flawed (i.e. don't get swept in the hot new thing). That is all that is required.
A return to March 2020 would be a loss of close to 50%.
Previous peak to present might be a less misleading factoid. And that is +20%. Still a big number but less impressive. It may be that confidence in public markets was bolstered by the resilience of the big companies' profits in the face of the virus.
Ok you want a longer period? it’s up nearly 70% from start of 2019, and it’s PE ratio is among the highest in its history.
For what it's worth, a look at the annualized returns chart for the S&P500 might be interesting. https://www.macrotrends.net/2526/sp-500-historical-annual-re... Those green bars on the right don't look tremendously out of place compared to past years. What's really different from previous decades is not the rate of growth but the lack of financial market downturns. Hard to say if that means we're ramping up to "the big one" or if we have fundamentally figured out how to better run the economy so that we have fewer downturns.
https://www.google.com/maps/place/Your+Hometown+Deli/@39.839...
Street view: https://www.google.com/maps/@39.8401111,-75.239345,3a,90y,10...
No pastrami on the menu, even though it's a NJ Deli. Hmm.
"Warren Buffet" eats at the buffet.
The closet thing I think we have are hoagie shops, but those aren't particularly special apart from the fact that we call them hoagies and not subs or even just sandwiches.
I gather it's quite different in the US though. (A 'deli' there being probably culturay Jewish? Whereas to me it's just a place that sells.. I don't know, cheese, olives, oily antipasti, anything it wants really just with an emphasis on fresh and nice and prepared or preserved in some way. Greek or Italian if anything, rather than Jewish.) Honestly the Street View photos someone posted look like a sandwich bar in a war zone!
As for a delicatessen shop, there are surely some not actually attached to grocery stores, but, for example, I'm unable to convince google maps to show me any in a region of 2MM+ people (in the [US] South) no matter which term I use containing "deli". If I needed to find one I'd probably search for "butcher", "grocer", or "market", and Google Maps confirms this is a good start for finding the right kind of store.
Stand-alone delicatessens here tend to be only barely 'a restaurant' (even then more 'only barely a café', really) with one or two tables for two. They sell cheeses, biscuits, olives, other antipasti, pickles, perhaps some select nice sandwiches or bruschetta, etc. Some sell probably higher margin items like boxed teas, coffees, and biscuits, related merchandise like cafetières, cotton bags, and tea strainers.
They are decidedly not 'diner' type venues, the place linked on Google Maps would be called a café in the UK.
(To be clear I'm not saying anything's right or wrong, just that it's interesting, terminology, and something that's very loosely the same but also really different.)
E.G. https://www.bloomberg.com/news/features/2019-03-08/the-gazil...
When I think Deli, it's usually something like this place [1]: http://firesideplainview.com/deliNsandwhiches.asp
Sandwiches, cold cuts, salads, drinks and some catering.
[1]Looks like it's really into Italian tropes with the Mussolini and Godfather sandwiches.
> On the other hand, it is clear that the Aberdeen analyst got useful information out of this meeting. The analyst paid close attention to the discussion of the chairman’s spa trip and charity polo match, and got a strong and accurate sell signal from that discussion. Surely the most useful information in the meeting came from the guy’s tan. If you describe an executive as “unfeasibly tanned” in a research note, you have definitely decided to sell. Here, that was the right call.
Unlike most of bloomberg, it is not paywalled at all.
If I ever get round to a blog I'll post it on here.
none of these self-reported volume numbers should be considered remotely realistic. exchanges have every incentive to cook their metrics in favor of "volume" to draw in fresh meat.
>Small investors who get sucked into these situations are likely to be harmed eventually, yet the regulators – who are supposed to be protecting investors – appear to be neither present nor curious.
then you are incorrectly attributing that to Matt. It was a quote from Einhorn’s Greenlight Capital.
> Our focus on Main Street investors reflects the fact that American households ...
> The federal securities laws we oversee are based on a simple and straightforward concept: everyone should be treated fairly and have access to certain facts about investments and those who sell them.
For example, you're required to pass varying levels of quizzes on financial knowledge to be allowed to trade different sorts of things. The goal of this is to protect naive investors from being taken advantage of.
They probably wanted to flip it for a reverse merger. Don't think that many businesses have the connections or need to create a flip like this for some Chinese company.
Matt Levine has been at Bloomberg since 2013.
Very little value added at all but much extracted.
Bloomberg terminal subscriptions with $20k+/year licenses as one small example. The equivalent of an Oracle to many on here and the licensing most despise but for some reason nobody questions this guy? Or Bloomberg/CNBC/similiar in general? Or anyone peddling any financial stuff? Would we just trust a big co enterprise salesperson that's been around the block? No we wouldn't.
Anyway, he said of Archegos before:
"But one thing I want to say about the banks is that if you were one of Hwang’s prime brokers and you had perfect information — about how big he was and how concentrated, about how many banks were financing him, about his effect on stock prices, about Viacom’s stock offering, etc. — you might still rationally do this trade, if you were confident you could get out first."
You'd have to be part of the system to make a statement like that.
Banks take deposits and list them as assets. And then get risky with that money they have relatively low cash reserves for. And when they screw up, it costs them less than what they gained. It's ridiculous.
The financial engineers' version of rational is reckless.
On the bank's balance sheet, a deposit is a liability. In fact, it's a short-term liability, since most deposits can be withdrawn on short notice. A bank's central business is to borrow short (from depositors) and lend long (to individuals and businesses).
> most deposits can be withdrawn on short notice.
Except for the fact that person A deposits $X in the bank and person B has $X withdrawn, nothing physical happens. It's just an offset on the books and enables them to keep very low cash reserves.
"As of March 2020, the minimum reserve requirement for all deposit institutions was abolished, or more technically, fixed to zero percent of eligible deposits. The Board previously mandated a zero reserve requirement for banks with eligible deposits up to $16 million, 3% for banks up to $122.3 million, and 10% thereafter. The removal of reserve requirements followed the Federal Reserve's shift to an "ample-reserves" system, in which the Federal Reserve Banks pay member banks interest on reserves that they keep in excess of the required amount." [1]
[1] https://en.wikipedia.org/wiki/Reserve_requirement
He writes like that because he's part of the system. It's so entrenched it's all self preservation and tons of money influencing the media to say what they want them to say. But it's hard to parse because the experts that are feeding seemingly sensible info are former Goldman Sachs or similar.
Jim Cramer bragged about how he manipulated stock prices at a hedge fund and if he was short you can't "foment", on your own, an impression that a stock is down but you do it anyway because "the SEC doesn't understand it". You trick the "moron longs" and "spread a rumor on Apple because the writers want that story and Apple isn't going to comment on it". "this is what's really going on in the market that you really don't see". "what's important when you're in that hedge fund is to not do anything remotely truthful because the truth is so against your view that it's important to create a new truth". It's absurd. [1] And this guy is still on a major network with major influence.
If you are looking at that Archegos situation objectively, you would say clearly - that's fucked up for them to do with other people's money. Not Levine.
Yet when "normal" people risk their own money on something he disagrees with, he's writing a big diatribe about how ridiculous it is. When banks play with their money, nothing to see here people. They might have been doing a rational move.
Or in this article "yes credit suisse did two bad things" and "Still it is strange to characterize this as primarily securities fraud against the shareholders, to think that the problem here was lying."
Just characterize it as securities fraud secondarily I guess Matt?
I like his insight into the system but he does way too much early PR damage control and apologies for the embedded players and not enough objective commentary. But again, he writes for Bloomberg and is former Goldman Sachs.
[1] https://www.youtube.com/watch?v=6csjSGyEbUs
He literally worked at Goldman Sachs, and he mentions this frequently, especially when poking fun at his former employers.
When this gets to a $100 million market cap by doing this, we land a story online about this crazy, useless business that's worth $100 million. It captures the imagination of hoards of new-found meme stock, one-tap-away, YOLO crowd and suddenly, it has volume.
Thanks to this new found volume, I can easily cash out my shares to all the suckers buying this at $13.
Am I seeing this right?
the only twist is that with crypto its possible to run this shell game much faster and with far less transparency thanks to pseudononymous accounts and the overall infrastructural obscurity that early stage crypotocoins enjoy, coupled with the near immediate price signal propagation possible in a purely virtual marketplace.
coinmarketcap owes its entire existence to its incredibly effective utility as a synthetic demand amplifier for extremely shallow, closely held token markets.
edit: forgot to add that when promoters need their own FOMO plant in the financial/tech media, one that talks up the amazing crypto-futurist potential of their new coin, a common payola tactic was to send the target journo a wallet preloaded with a "few coins to play around with, just to see how it works." Then simply sit back and let them figure out for themselves how to turn a routine $500 story assignment into an easy, practically untraceable $5k cash out. wash, rinse, repeat with a new ICO next month.
Look at this ramp starting March 28th, prior to the announcement:
https://coinmarketcap.com/currencies/mobilecoin/
It's popular in the crypto world especially for NFTs where you just need to have a few wallets to trade assets amongst.
> Painting the tape is an illegal activity and prohibited by the SEC because it creates an artificial price.
So it sounds clearly illegal and fully under SEC jurisdiction in the deli stock case, but what about the crypto market cases? Can the SEC go after other/foreign market cases for people under US jurisdiction or SEC regulated entities participating in painting the tape in blockchain markets or international markets?
Where I can see a list of all the individual trades that got the company to a $100M valuation? I'd like to see how it actually got bid up.
To be very clear, I'm looking for every single trade (Mr. X sold 62 shares to Mr. Y for $10.50 on April 7, 2021 at 10:52 am) going back to the beginning of the company. With or without the actual identities of Mr. X and Mr. Y.
I expect that the answer is that no such list is publically available. But why not? I can understand a privacy argument about Mr. X and Y's names, but why aren't all the individual trades public information for a public company?
If we did put a name attached to every trade, it'd become clear when someone is breaking up a big order into many small ones to avoid 'disrupting the market price' -- that is, getting a good price for at least some of their sale. Or buy order, I suppose.
Much like everything in finance there is a gatekeeper, and they seek to extract every dollar they can.
https://www.ctaplan.com/index
https://www.ctaplan.com/publicdocs/ctaplan/notifications/tra...
but where do these data services get their data from? Does the exchange itself sell this data wholesale?
some crypto exchanges also sell order flow but they don't really need to, as its far more profitable to front run their own users, whose entire account activity including sidelines and account balance transfers, is completely exposed to exchange insiders, who can trade against it. "oh look, whale user #4457 just transferred $100k of $COIN into their account. I wonder what they plan to do next?"
Try a cryptocurrency instead. It's all the rage right now...
https://en.wikipedia.org/wiki/Pump_and_dump
https://en.wikipedia.org/wiki/Market_manipulation#Runs
What are the chances that bots parsing financial news happened to pull out the stock code and auto-bought stock which was then sold manually? How often does this happen? In which case there were no people to buy it
My guess would be almost 0 in this case. I'm sure there are cases where bots have been fooled in the past and bought themselves into bad situations, but prior to this story breaking, this stock was only trading a couple hundred shares a day. Trying to algo trade a stock with almost no liquidity seems like a recipe for disaster so I would think many bots would ignore the stock on volume alone.
I really believe it's just people who want to be part of the story and are buying into the novelty.
Think about the rise in this no-name company with respect to the following laws and you'll all have more clarity on what actually went down.
- HR2513
- Illicit Cash Act
- Equitable Act
"Chinese Communist Party currently controls more than US$30 Trillion of Western Financial Assets scattered around the globe outside of mainland China. This war chest continues to grow at roughly $40 Billion a month. "
http://www.deepthroatipo.com/the-stealth-nationalization-of-...
"This time, it's different." No it's not.
"David Einhorn warned people not to invest in Hometown International, even though it had never occurred to them to invest in Hometown International, but once they were warned not to they absolutely did."